Untold Story of $13b Paris Club Refunds and Consultancy Controversy
True Story of London-Paris Club Multi-billion Dollar Refunds and Ned Nwoko’s Heroics
By Nosike Ogbuenyi
In recent times, the payment of the outstanding $418m service fee to four consultants who facilitated the approximately US$13 billion Paris/London Clubs refunds to the 36 states and 774 local governments has been hugging unnecessary controversy. This follows the opposition of the Nigerian Governors Forum (NGF) leadership to deductions from their share of the Federation Account for the payment. The NGF is calling for forensic audit of the consultancy claims and further investigation of the consultants by the Economic and Financial Crimes Commission (EFCC). The governors are also contending that US$418m accrued payment was too much for the states to shoulder. The NGF has even hired a ranking Lagos lawyer to file suit seeking to halt the payment which has already received presidential approval.
The pending consultancy payment by the states are service fees which are supposed to have been deducted at source by the Federal Government during the payment of the various tranches of London/Paris Club refunds to states between 2016 and 2019. The states had collected the entire payments then with the promise that the service fees accruing to the consultants would be warehoused and paid to them. But that pledge has not been kept thereby constraining the consultants to file various suits in court to compel the government to pay. They got judgments in their favour which left the Federal Government at the mercy through invocation of garnishee orders.
The Federal Government in approving the US$418million payment to the four consultants came out with a staggered payment arrangement which spreads the deductions over a period of ten years. It is desirous to have the matter of the payment resolved to avoid further embarrassment of government through enforcement of garnishee orders by the consultants.
They include the fact that enforcement actions have already been carried out against the Federal Government in various cases through garnishee orders absolute made against the Central Bank of Nigeria (CBN) attaching Federal Government funds.
Under the prevailing situation, the Federal Government is bearing liability over the actions of NGF and ALGON in not paying the consultants when they reaped the refunds. Yet the consultants were lawfully engaged by them. It smacks of selfishness for the NGF to be resisting efforts to defray the liability incurred by them without providing any buffer or safety net for the Federal Government. And should the Federal Government accede to the request of the governors by not implementing the payment, the implication is that the judgment creditors (consultants) will continue to threaten or take actual steps against the assets and funds of the Federal Government and its agencies. Such enforcement would come with the accompanying adverse effects and legal burden that would be suffered by the Federal Government and its officials and not the NGF or ALGON. Within the forgoing matrix, it has become germane to explore the true origin and process of actualizing the multi-billion dollars refunds.
Jim Wolfensohn (full names James David Wolfensohn),President of the World Bank from 1995 to 2003 had one quality in common with Nigeria’s Ned Munir Nwoko – courage. By the year 1995 when Wolfensohn assumed office as the global bank’s Chief Executive, corruption was festering in most of the world’s mega development institutions and it was a gargantuan task getting the institutions to tackle the pervasive cancer.
Although, a few bilateral agencies and non-governmental organizations wanted the cancer of corruption ravaging the institutions to be addressed, the big development and finance agencies recoiled waving the mantra of non-interference on corruption matters. They were afraid to offend their super member states whose companies were implementing large scale contracts which they financed.
As the World Bank President, Jim Wolfensohn took courageous measures against several odds. He undertook tours of most of the member states of the World Bank especially developing countries where corruption in loan and procurement processes was most prevalent. Nigeria was a country of special interest to him for some reasons. First, just as he took over the affairs of the World Bank at a time when the leading financial institution was facing challenge of corruption, the new civilian administration in Nigeria was contending with spiraling corruption index after decades of military rule.
Second, the President Olusegun Obasanjo administration’s tough stance against corruption rhymes with his anti-corruption policy at the World Bank. It was during Wolfensohn’s visit to Nigeria in the early 2000s that he made a statement that was capitalized upon by Ned Nwoko, then a serving member of Nigeria’s House of Representatives to commence the long drawn struggle that culminated in the liberation of Nigeria from the perennial external debts overhang associated with the London-Paris Club of creditors.
The Australian-American World Bank President announced Nigeria’s foreign debt status as standing at about $25billion, a figure which was far off the circumference of the $35billion which Nigerian officials had disclosed. There was no room for, as usual, sweeping that under the carpet as an innocuous statistical mix up because a concerned Parliamentarian, Ned Nwoko was ready to plunge into the matter and unravel the true position of things.
As a matter of fact, Ned Nwoko had helped some other countries such as Morocco, Ghana, Mali and Senegal to superintend and dig up the bare truth of their foreign loans. He had guided them on how best to source, negotiate and manage the loans or debts successfully. He had counseled those countries on strategies for detecting and evading asphyxiating debt yokes and traps set by foreign cartels and institutions sometimes in cahoots with local collaborators.
Concerned about the discrepancy in Nigeria’s debt figures and fired by patriotic fervor to do for his fatherland even more than what he had done for other countries, Ned Nwoko approached the then Nigerian President, Olusegun Obasanjo. He intimated him about his experience in other countries and desire to launch an investigation to unravel the correct structure of Nigeria’s external debt profile. President Obasanjo who himself was evidently committed to fighting the cankerworm of corruption, wasted no time in giving his nod for Ned Nwoko to proceed with the big task he has picked the gauntlet to execute on behalf his country and government at different levels.
Following a presidential directive, Ned Nwoko held fact-finding meetings with the Finance Minister and other related government officials to acquaint them with details of his idea and mission. The dialogues were also for the purpose of availing him requisite documents in connection with the external debts.
Officials in some relevant Ministries were concerned about his idea of litigation. They were afraid that the move might offend the powerful lending nations and their equally powerful finance cartels like the Paris and London creditor clubs. Another category of officials were apprehensive based on their calculation that such actions might either expose their corrupt deals or block their sources of self-enrichment.
But Ned Nwoko was undeterred. He is not known to be a man that will be easily dissuaded by emotions or sentiments on such critical issues that impinges on his home country’s survival and development. He was poised for any eventuality on the way of liberating Nigeria from the yoke of over-bloated debt burden.
THE LEGAL SLUGFESTS
Prior to and during his tenure as a member of National Assembly, Ned Nwoko had gathered ample information and data on gaps in the superintendence of foreign loans especially the manner they were sourced, negotiated and signed. Armed with the evidence he gathered from government officials at the centre, some states and other sources together with what he gleaned from Wolfensohn’s visit, the relentless international attorney, launched a massive inquest backed by multi-pronged legal slugfests at the global stage. He certainly knew more than most Nigerians about the inadequacies and rots in the world’s large development institutions and finance agencies.
Armed with evidence from both ends, he wasted no time in embarking on a long drawn and tortuous inquest to unravel the innermost truth about Nigeria’s debt profile abroad. Through Ned Nwoko and Associates and Linas International Limited, he filled multiple legal proceedings, between 2004 and 2010 in different countries across Europe and America where the headquarters of the big development institutions and finance agencies as well as the big international lending banks are located. These include London, Paris, New York, Geneva (Switzerland), Abuja and other places. His principal clients were Nigeria’s 36 states and 774 local government areas (LGAs) which were the primary victims of over deductions in the guise of repaying and servicing accumulated foreign loans.
The stance of some foreign independent agencies such as Transparency International (TI) and the France-based Organization for Economic Co-operation and Development (OECD) might have indirectly helped to wet the ground for Ned Nwoko’s intricate task.
HUGE COSTS AND RISKS OF INTERNATIONAL LITIGATIONS
For several years dating back to 2004, Nwoko, at grave personal risks and costs pursued and fought the powerful 22-member country creditor organization (London/Paris Club) venomously. What he discovered in the process was mind-boggling. He spent so much on mobilization, filling, processes and court appearances. Aside the regular legal expenditures, he assembled auditing and forensic teams at both international and local levels.
Ned Nwoko’s early findings revealed that in almost all the cases, the amount of the actual loans taken had ballooned due to multiplicity of tangential costs and factors such as penalties, rescheduling, handling and sundry bank charges.
THE DEALS WITH STATES, ALGON AND NGF
Because his clients (States and the LGAs) were initially skeptical about his success in the battle, they were disinclined to commit a dime to the project. Rather, they were willing to sign off as much as 30% of the amount recovered to him as his consultancy service fee. He eventually signed at 20% in some and 10% with others. And the states and the local government were all happy and satisfied with that at that time when the cake had not been baked. Various states individually signed agreements with him to represent them . The deals were signed between 2004 and 2012 with Adamawa, Taraba, Anambra, Ondo, Ebonyi, Imo, Niger, Bayelsa, Kogi, Abia and Edo among others before all the states entered into a class agreement with him under the NGF.
When against the grain of widespread expectation, he triumphed over the powerful cartel and the over $13 billion London-Paris Club refunds became a reality, the song changed for the governors under the panoply of Nigeria Governors Forum (NGF) and the local government councils under Association of Local Governments of Nigeria (ALGON).
Notwithstanding the agreements they had already entered with Ned Nwoko on consultancy, they began to engage more consultants and even contractors with the ultimate aim of taking a cut from the windfall.
LESSONS ON FOREIGN DEBTS MANAGEMENT
The efforts and success of Ned Nwoko opened the eyes of many people particularly Nigerians that any person or lawful company can bring a legal action against a contractor or organization who were found to have acted corruptly even with regard to external loans or debt management.
Following a suggestion made to President Obasanjo by Ned Nwoko on the need to establish a government agency through which the issue of management of local and foreign debts could be mainstreamed and handled professionally and diligently, the Debt Management Office (DMO) was established. this into World Bank operating processes was not going to be easy. At that time only few countries among the superpowers had criminalized foreign bribery by its nationals while most of the countries even allowed bribes to be tax deductible as business expenditure.
WHAT THE THREE TIERS OF GOVERNMENT GAINED
A staggering $13 billion was recovered for the states and local governments through the efforts of Ned Nwoko and some others who joined him later. Of this amount over $3 billion accrued to the local governments while $10 billion went to the 36 states based on varied proportions. Between 2016 and this year, the states and local governments received the full refunds secured for them through the sweat of Ned Nwoko. They received the amount based on the promised that they have warehoused the 20% consultancy fee for Ned Nwoko.
Another fall out of the battle was the writing off of $18 billion of Nigeria’s debts owed the London-Paris club and the buyback deal which cleared the outstanding $12 billion. With that, Nigeria exited the club’s debt overhang. Beyond that the states and local governments benefitted from over $13b as refunds of excess deductions to service the Paris-London loans.
NGF AND THE PROLIFERATION OF CONSULTANTS
In making their argument against the payment of the outstanding $418b to the consultants, the NGF strives to downplay the fact that several consultants are involved and that there were many consent agreements. The agreements were entered into either between the governors and the consultants or between the consultants and the Association of Local Governments of Nigeria (ALGON). For instance, a letter of no objection for payment of legal/consultancy fees to Linas International Limited regarding over-deductions on Paris and London Club loans on the accounts of states and local governments, was signed on July 5, 1017 by the then Chairman of the forum and Fayemi’s predecessor, Governor Abdulaziz Yari Abubakar of Zamfara State. This is just one of several agreements that commit the NGF and ALGON to payment of the consultants. Is it lawful for the states and local governments to make a u-turn midway on the deals they willingly signed with the consultants after collecting billions of dollars worth of refunds facilitated by them? The answer is No.
And who is to blame for the duplication of consultants? The NGF ia largely culpable. Once it became clear that Ned Nwoko was set for a resounding success in the London-Paris Clubs refund battle, the NGF and the ALGON changed their dance steps. To the utter disbelief of the lone fighter, Ned Nwoko, they began to introduce and smuggle in additional consultants and consultants to share in what they wrongly perceived as ‘a windfall’.
The crux of the matter is not about EFCC, forensic audit or grandstanding with corruption allegations against the consultants or government officials. The NGF and ALGON complicated issues when they started introducing new consultants and signing fresh agreements with them over a matter that was already being effectively handled by Ned Nwoko Associates and Linas International for over a decade. The appointment of fresh consultants and contractors by both the NGF and the ALGON after Ned Nwoko had won the case or when it became obvious that he would triumph was what escalated the cost of the services. The Federal Government knows the truth about the matter.
The President knows it is not an issue of corruption on the part of the consultants per se but bad faith aimed at barricading payments with documentary and judicial backings.
Of all the consultants, Ned Nwoko and his Linas International Limited come clean of underhand dealings. It is on record that Ned Nwoko was the person who initiated the Paris-London Club refunds struggle which he pursued to logical success. Along the line, the NGF succeeded in convincing the President to direct the EFCC to investigate Prince Ned Nwoko and his firms thrice, but the anti-graft body on all three different occasions found nothing incriminating against him.
Again, those describing the approved part payment of $418million as humungous and unbearable should equate it with the sum of $13billion recovered and reaped by the beneficiaries together with the $18b earlier written off. This hindsight, together with the binding agreements, probably explains why the Federal Government, which knows more about the matter, has demonstrated clear commitment to making the payments in order to avoid embarrassing judgment enforcement especially abroad.
Throwing ‘corruption’ toga on the consultants and demonizing the consultants cannot force them to abandon the demand for their fees. Honouring the terms of the agreements with credible ones among them like Ned Nwoko Associates and Linas International Limited will enhance rather than diminish the anti-corruption stance of the Muhammadu Buhari administration and preserve the integrity of the governors. There are still many Nigerians will not fall for the cheap antic of hollering corruption against persons and companies whose only known offence is that they are asking to be paid for lawful services rendered.
As already stated, Ned Nwoko’s involvement in the matter of proper debt or loan management stretches far back to as early as 2004. This kind of leader with time-honoured reputation of fighting against injustice cannot be described as opportunistic or speculative in any way.
Is it not discernible that the governors who are indebted to the consultants are the ones kicking against liquidation of the debts? Of course, it is often the case in our clime that many people find it difficult to fulfill financial obligations once they have achieved their objective or received what they were looking for. That is the prevalent nature of man.
Recall that it was the NGF that about two years ago allegedly appropriated US$100 million which was part of the US$350 million earlier approved by Mr. President for payment to Ned Nwko’s firm, Linas International Limited as consultancy fee on Paris Club refunds to local governments. Ned Nwoko made the allegation in a letter he wired against the NGF to the Attorney – General of the Federation and Minister of Justice through his team of lawyers.
Nigerians have not forgotten how for several months, the Paris Club refunds constituted a lifeline of immense benefits particularly to the states and local governments. They provided needed relief for governments to meet key obligations particularly payment of workers’ salaries, pension arrears, provision of welfare benefits and critical social infrastructure. As a matter of fact, the refunds came at a time when the nation was recovering from the tides of recession and facing severe economic downturn which set in since 2013 and climaxed in 2018/2019. The multi-billion dollar refunds which came in tranches helped some governments particularly at the state and grassroots levels to regain their fiscal balance. And neither the Federal Government nor the consultants should be made to pay for the squandering or misapplication of the refunds by some governors.
WHY PATH OF HONOUR SHOULD BE FOLLOWED TO PAY
And in factuality, if you risk nothing, you gain nothing. Why begrudge those who staked their lives and careers to stick out their necks and fight for a cause while you recoiled in your comfort zone and thrived in political and social correctness? As the holy books say, a labourer is entitled to his wages.
The NGF and ALGON should better leave sentiments aside and treat the matter of payment of the various consultants involved on their individual merits. Some persons may not like the faces or names of some of the consultants who are entitled to the payments, but the question that arises is: Did consultants facilitate the refunds? The answer is yes, simply and squarely.
It is also irksome that a dogged patriot like Prince Ned Nwoko who is the undisputable initiator and principal facilitator of the refunds is being subjected to needless further litigations by the NGF. It took his eagle eye to detect that some tiers of government in the Nigerian federation were being shortchanged via over deductions running into billions of dollars.
Why has the NGF and some wily Nigerians forgotten these efforts so soon? It smacks of lack of integrity, dishonesty, selfishness and duplicity to scheme to begin to sing different song on validly sealed agreements like those between Ned Nwoko and the NGF and the LGAs. Of course, the states and the LGAs can’t possibly eat your cake and have it back.
Rather than be scurried, the Federal Government should be commended for the bold policy initiative to honourably liquidate the judgment debts and avoid the agony and calamity of judgment enforcements. It would be belabouring the obvious to state that many states are bereft of credibility when it comes to paying for jobs and honouring obligations. Just conduct a checklist on the states and the local governments and you will ascertain that most of them are truly “graveyards of so many companies, businesses and upstarts ventures who are lured into rendering services for which they take benefits and refuse to pay”. The present case about paying Paris Club refund consultants has not deviated from that ignoble trajectory.
In the case of Ned Nwoko, he has already given substantial concessions to the NGF and discounted the sum he is entitled to in the judgment debts from $142million to about $68million. This implies that only about $68 million out of the reported $418 million accrues to him. And furthermore, his acceptance of Promissory Notes instead of direct cash payment, as was done for the states and local governments in the refunds results to a further loss of value.
The NGF appears to have committed a grievous error by lumping Ned Nwoko together with other consultants because his case is different and clear. Twisting of facts and manipulating public opinion to blackmail all consultants who staked so much to secure the much applauded Paris-London Club refunds that bailed many states and local governments in the country from severe economic downturn cannot help any side. The path of honour is better than that of lucre.